Itochu increases interest in Rössing South

12 July 2010

Japanese trading house Itochu is set to become one of the largest shareholders of Extract Resources, owner of the Rössing South uranium project in Namibia, after agreeing to acquire a 10.3% stake in the company.

Rig at Rössing South (Image: Extract Resources)

Itochu's wholly owned Australian subsidiary, Nippon Uranium Resources (Australia), is buying a total of 25,107,278 shares in Extract, the vast majority of which are the entire former holding of energy junior Polo Resources. The remaining shares are being sold by two other companies which are linked to Polo. The 22,550,849 shares making up Polo's interest are being sold for A$7 ($6.1) per share, netting Polo some A$157.9 million ($137.9 million) in total proceeds. The sales are subject to relevant approvals by Polo shareholders and Australia's Foreign Investment Review Board.

Namibia's Rössing South, also known as the Husab uranium project, is described by Itochu as one of the largest uranium projects in the world. Feasibility studies are currently under way at the site, and Extract plans to produce 5700 tonnes of uranium annually from an open pit by 2014.

Extract owns 100% of Rössing South, and in turn, Extract's main shareholder is Kalahari Minerals, in which Itochu acquired a 14.9% stake in May 2010. "As a significant shareholder of leading uranium companies, Itochu envisions contributing greatly to the stable supply of uranium to Japan," the company said in its press release.

According to Itochu, it expects the project to receive "full support" from the Japanese government: when Itochu bought its Kalahari stake earlier this year, the state-owned Japan Oil, Gas and Metals National Corporation (JOGMEC) said it would extend some 4 billion yen ($43 million) of exploration financing to the project.